The economic consequences of Zimbabwe’s ban on cross border trade

Booming cross border trade with Zimbabwe has taken a kick in the guts from authorities amid fires, violence and unrest.

It all began when Zimbabwe tried to ban imports from neighbouring South Africa, in a bid to encourage the manufacture of goods in its own back yard. Those trying to import now face heavy duties, in retaliation traders burnt warehouses and blocked roads at the Beitbridge border post.

Zimbabwe’s Charity Charamba, Senior Assistant Commissioner and Chief Staff Officer Press and Public Relations responded with a stern warning: “The Zimbabwe Republic Police would like to warn all those who are inciting and engaging in violence, that such misconduct will be severely dealt with.”

The ban on imports from South Africa, not only cripples boom of trade but could also hurt South African shopkeepers, says Promise Mkwananzi, Director of the Zimbabwe Informal Sector Organisation.

“It is impossible for the government to pass a law like this one, when the country’s economy is in shambles.”

With over $700 million goods going into Zimbabwe, South Africa is the largest importer to the country.

“This is a desperate move by Zimbabwe, to try and preserve their currency and to stimulate internal trade, however [it is] not viable as no local company can provide the basic consumer goods that South Africa offers,” says Ian Cruickshanks, Chief Economist at the Institute of Race Relations.

It could also mean more smuggling, warns Dawie Roodt, Chief Economist at Efficient Group.

About one million Zimbabweans cross the Beitbridge border post, every month buying imports from South Africa, on buses and cars which has gathered momentum over the last decade as Zimbabwe’s economy has imploded.

Vince Musewe, an Independent Economist and Secretary for Economic Affairs Peoples Democratic Party, told CNBCAfrica.com that he is worried that his country did not done its homework before implementing this economic policy.

“The sudden control of imports overnight without adequate notice always leads to the immediate emergence of a black market especially where local demand for a particular [product] is so high and we do not have the local capacity to fulfil that need.”

“As a country we should rather look at banning the importation of maize and producing it here ourselves, which would be a more meaningful approach with a more positive effect on our trade deficit. But again we need to plan that properly.”﻿